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Hurried trip down the aisle nixes widow’s survivor benefits

Waiting until age 60 or later to remarry preserves Social Security benefits

Patience is indeed a virtue. That’s the platitude that came to mind when Caroline Emswiler, a financial adviser with Wealth Financial Consultants in Eden Prairie, Minn., wrote to me to ask about a widow who remarried last summer a few weeks shy of her 60th birthday.

“My assistant’s father died two years ago, and her mother just remarried two weeks before she turned age 60,” Ms. Emswiler. “She was married to her first husband for 30 years, and I told her she should have waited to marry until after 60 so she could collect Social Security widow’s benefits.”

Ms. Emswiler is correct. As it states on the Social Security website, “If you remarry before you reach age 60 (or age 50 if disabled), you cannot receive benefits as a surviving spouse while you are married. [However], if you remarry after you reach age 60 (age 50 if disabled), you will continue to qualify for benefits on your deceased spouse's Social Security record.”

The SSA site also notes that if your new spouse is a Social Security beneficiary, you may want to apply for spouse's benefits on his or her record. If that amount is more than your widow's or widower's benefit, you will receive a combination of benefits that equals the higher amount.

So why did the widow rush down the aisle? “She was told she wasn’t eligible for benefits because she earns too [much] — about $50,000 per year,” Ms. Emswiler explained. “Would she have qualified for some sort of widow’s benefit, or is it a moot point since she’d lose $1 for every $2 earned over the income threshold? “

It’s true that anyone who collects Social Security benefits before their full retirement age — currently 66 — is subject to earnings cap restrictions. For 2014, they lose $1 in benefits for every $2 earned over $15,480. So if the widow had waited until after she turned 60 to remarry, it probably would not have been in her best interest to collect survivor benefits as soon as she was eligible. To maximize her benefit, she should have waited till 66.

So, depending on the amount of her potential survivor benefits compared to her own retirement benefit, remarrying before 60 may have been a hasty and costly decision.

Survivor benefits are worth 100% of what the late worker collected or was entitled to collect if the survivor waits until full retirement age to start them. Although survivor benefits never grow any larger, retirement benefits do. They earn delayed retirement credits worth 8% per year for each year an individual postpones collecting them beyond full retirement age up to 70.

A better strategy for this widow may have been to collect survivor benefits at her full retirement age of 66 when she would qualify for full survivor benefits and the earnings cap disappears. And assuming her own retirement benefits, including four years’ worth of delayed retirement credits, would have been larger than her survivor benefits, she could have switched to her own retirement benefits at 70.

“As the timing was so close, do you think the Social Security Administration might reconsider and allow her to fix this situation somehow?” Ms. Emswiler asked. I doubt it. Short of seeking an annulment or divorcing her current husband, or if her current husband dies, I don’t see how the newly remarried widow can collect survivor benefits on her late first husband. Still, I hope she lives happily ever after.

And while you may think this is a unique situation, apparently it’s not. Days later, I received a similar question from Janet Critchley, a financial adviser with Brinton Eaton in Madison, N.J., asking about a client who was widowed at age 55 and remarried at age 59 and 10 months.

“I don’t think she is eligible for survivor benefits because she is just shy of the age 60 requirement,” Ms. Critchley correctly stated. “But if her current husband dies, can she pick the higher of the two survivor benefits or is the first survivor benefit lost forever?”

Yes, she can choose the higher survivor benefit of the two. That’s what I call a prescription for a merry widow. And in the meantime, tell all your widowed clients, if they plan to remarry, wait until at least age 60 to do so.